Dividend yield funds: For risk-averse investors seeking lower volatility

The dividend yield acts as a cushion that prevents stocks from falling further

Dividend yield funds have not attracted significant investor interest, with merely Rs 214 crore inflows in January 2025 — the lowest among equity-oriented schemes. Despite being one of the oldest categories, these funds hold the smallest assets under management (AUM) of Rs 31,049 crore as of January 31, 2025. However, they are well suited for today’s volatile market as they have the potential to offer stability.

 

“Dividend yield funds (DYFs) enable investors to get exposure to companies with well-established track records and healthy cash flows, both of which are essential ingredients for companies to deliver compounding growth over the long